The long-term objective of the proposed research is to gain an understanding of the molecular basis for the selective and sequential regulation of transcription in eukaryotic cells. Several novel features of frog virus 3 (FV3) transcription make it an unusual and attractive model in progressing toward that objective. The mechanisms of FV3 transcriptional regulation will be investigated from one perspective: the role of the FV3-induced protein that allows transcription of highly-methylated DNA. The specific aim of this proposal and the methods for achieving this aim are as follows: To investigate the mechanism by which FV3 induces host RNA polymerase II to transcribe methylated DNA templates. This will be done by probing transient and stable transformants of methylated target genes with nucleases to observe transitions from inactive to transcriptionally active nucleosome structures after infection with FV3, and an attempt will be made to clone and characterize the viral protein responsible for the transcription of methylated DNA. Cancer is the result of a heritable change in the cellular program that involves aberrations in gene expression, especially of oncogenes. Demethylation, when combined with the presence of other trans-acting regulatory proteins, locks a gene into the expressive state, and seems to occur after an initial event which enables transcription of the methylated gene. The demethylation of endogenous cellular oncogenes may thus be a contributing factor to the occurrence of human cancer. Not only will the studies of FV3 cis- and trans-transcriptional regulatory mechanisms extend to the elucidation of mechanisms controlling gene expression in normal and malignant cells, but the discovery of an FV3-induced protein that can turn on genes previously silenced by methylation offers a unique opportunity to gain insight into the role of DNA methylation during differentiation and in neoplasia.